99 Cents Only has spent the last six months upgrading its systems and procedures related to accounting for merchandise inventories. In the meantime, and ahead of its second quarter results for fiscal 2014, the company has begun taking physical inventories at its stores on a SKU-level basis for the first time.
The new IT system, built on SAP, will allow the company to track inventory in real time at each retail store on a perpetual basis by SKU. Implementation is underway and the company expects to be fully operational by the end of fiscal 2015.
“We are working diligently with our current and former auditors EY and BDO to complete our financial statements for fiscal year 2013 and file our Form 10-K with the SEC as soon as possible,” said interim CEO Richard Anicetti. “However, I would like to emphasize that in our opinion, each of the inventory related adjustments is the result of new processes and procedures that will lay the foundation for 99 Cents Only to continue its current growth trajectory and to be a better, more efficient organization in the future.”
The company reported a net sales increase of 12.9% to $443.9 million for the quarter, compared to $393.4 million for the second quarter of fiscal 2013. Same-store sales increased 5.9%.
The company opened seven net new stores for the quarter, for a total of 329 stores, an increase of 8.6% in store count over last year.
In fiscal 2014, the company expects to open 26 to 30 new stores, exclusively in existing markets.
More than half of the company's sales come from food and beverages, including produce, dairy, deli and frozen foods, along with organic and gourmet foods.